Erickson Air-Crane Inc. (EAC) posted second quarter 2013 adjusted earnings of 4 cents per share, far below the Zacks Consensus Estimate of 28 cents. The quarterly figure was also lower than the year-earlier adjusted profit level of 10 cents by 60%.
Including acquisition and integration costs, the company incurred a loss of 20 cents per share compared with earnings of 10 cents per share in the second quarter 2012.
Operational Highlights
Erickson Air-Crane registered robust quarterly pro forma revenue of $84.3 million, up significantly from the year-ago level of $37.9 million. The figure also surpassed the Zacks Consensus Estimate of $74.0 million.
Including the Evergreen Helicopters Inc. integration, which closed on May 2013, the top-line jumped 81% year over year to $68.6 million during the quarter. Strong growth was led by contributions from infrastructure construction and timber harvesting. The acquisition of Evergreen Helicopters also aided the company with customer diversification, mission capabilities as well as geographical expansion.
The company also realigned its reporting segments. Now, the Government segment comprises defense and security, firefighting, and transport and other government related activities. The Commercial segment includes timber harvesting, infrastructure construction, including oil and gas and MRO/Manufacturing. Total revenues of $84.3 million comprised $15.9 million from Government and $25.4 million from the Commercial segment.
On the cost front, total operating expenses were $12.6 million, up a considerable 75% year over year. Cost of revenues also surged 85.1% to $51.1 million from $27.6 million in the second quarter of 2012.
Adjusted EBITDA was approximately $17.2 million versus $10.0 million in the year-ago quarter. Operating income (including $4.0 million of acquisition-related expenses) in the reported quarter was $4.9 million versus $3.1 million in the same period last year.
Financial Condition
Erickson ended the second quarter 2013 with cash and cash equivalents of approximately $5.8 million, compared with $1.5 million at the end of 2012.
Long-term debt (including current portion) climbed to $450.8 million at the end of the quarter from $97.9 million at 2012 end.
Guidance
Including the Evergreen Helicopters Inc. acquisition, the company expects 2013 revenues in the range of $385.0 million to $395.0 million and adjusted EBITDA in the range of $108.0 million to $116.0 million. Earnings are expected in a band of $1.36 to $1.58 per share based on assumed fully diluted shares outstanding of 13.8 million.
On a reported basis, Erickson expects its top line in the band of $325.0 million to $335.0 million for 2013. Adjusted EBITDA is expected to be between $93.0 million and $101.0 million. And earnings per share are projected in the range of $1.54 to $1.75 based on 13.8 million of assumed shares outstanding.
Update on Acquisitions
In Mar 2013, Erickson entered into a stock purchase agreement with Evergreen International Aviation, Inc. (“EIA”) for the purchase of Evergreen Helicopters, Inc. (“EHI”) for $250 million. The company wrapped up this acquisition on May 2, 2013.
The acquisition of EHI provides Erickson with an incremental fleet of 64 aircraft comprising both helicopters and fixed-wing airplanes. This diverse fleet serves a wide range of customers which include passenger transport and airlift services for the US military.
In Nov 2012, the company had announced the acquisition of Air Amazonia from HRT Oil & Gas. The company closed the Air Amazonia transaction in the second quarter of 2013.
With Air Amazonia and EHI, the combined business would operate a diverse fleet of 100 aircraft. These acquisitions would bring in synergies and significant opportunities for incremental growth in the near as well as long term. Moreover, the combination of these businesses would diversify end markets, regions serviced, mission capabilities and aircraft types.
Last year, the company completed the purchase of Sun Bird Aircraft and associated spare parts inventory and accessories from SDG&E, a subsidiary of Sempra Energy (SRE). The Sun Bird is an Erickson model S-64F Aircrane that was originally purchased by SDG&E from Erickson Air-Crane in 2009. This transaction will allow the company to take advantage of market opportunities in 2013 and beyond in the oil-and-gas and power line construction sectors in South America and elsewhere.
Zacks Rank
The company presently retains a Zacks Rank #3 (Hold).
Stocks worthy of consideration in the aerospace and defense sector are General Dynamics Corp. (GD) and Lockheed Martin Corp. (LMT), both with a Zacks Rank #2 (Buy).
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